Commercial lines is the insurer’s saving grace as personal lines bring up disappointing CORs

Covéa’s UK became the latest insurer to suffer a profitablity slump as claims hit hard in both home and motor, with bad weather and the rising cost of vehicle repairs taking its toll.

Profits fell from £24.1m to just £1.5m in 2018.

A major driver of the profit fall was personal lines motor, the largest part of the business with £389.1m GWP, which fell to 102.8% combined operating ratio (COR).

Covea, like others, was squeezed between competitive prices and rising claims inflation. 

So far this year, Esure’s solvency will need signficant recapitliastion, Co-op was hit hard by motor losses, RSA won’t have motor fixed until at least next year and Saga crashed deep into the red amid the FCA renewals crackdown.  

In addition to the motor problems, Covea suffered in home insurance where the Beast from the East storm, large claims and subsidence pushed the book into a 106.1% COR.

The company’s combined operating ratio (COR) only just made underwritng profit at 99.7%.

 2018 2017

Gross written premium



Underwriting profit



Profit after tax



Combined operating ratio




Commercial is the saving grace

The highlight for the company will be its commercial lines business, with a very healthy COR of 89.7%.

James Reader

James Reader, Covea Insurance chief executive

The commercial lines business also reported a 9% growth in premiums and and “strong improvement in profitability” according to the results annoncement.

Struggles within the personal market

However, personal lines fell flat, and Covéa says this was “in the face of extremely competitive market conditions and strong inflationary claims trends, particularly on motor.”

Covéa put the decrease in personal lines motor profitability down to this, as well as the frequency of theft claims and the average cost of vehicle repairs “increasing significantly.”

Meanwhile, home profitability was also impacted by a higher number of large fire claims and adverse weather experience – including the “Beast from the East” freeze event and an increase in subsidence claims following the exceptionally dry summer.

Market investment at fault for falling pre-tax profit

Finally, Covéa blamed ”volatile investment market conditions” for its drastic fall in pre-tax profits. Claiming the uncertainty surrounding Brexit led to a ”significant fall in the market value of the company’s investment portfolio during the year.”

James Reader, Covéa Insurance chief executive commented: “2018 was a challenging year for our personal lines business, as we faced soft market conditions, adverse weather and a significant increase in claims inflation, particularly in motor. By contrast, our commercial lines business has continued to deliver good levels of premium growth alongside a strong underwriting result.”

Reader, however decided to look at the positives and commended the company on still delivering acceptional service in the face of adversity.

He said: “Looking beyond our financial performance, we’ve continued to deliver market-leading levels of service to our customers and broker partners and have commenced a major programme of investment in new digital technologies, to ensure that we continue to meet their changing expectations.

“We’ve also made good progress in creating a more inclusive workplace, and in ensuring Covéa Insurance remains a great place to work for all our people.

“We are very ambitious as an organisation and I remain confident that we are well placed to deliver on those ambitions.”